The PSUs had decided to invest in Kerala at a time when the state was unable to raise finance to keep its debt-ridden undertakings afloat. Banks had been reluctant to pump in money into such units after the state Government had failed to honour its earlier guarantee for the bank loans. In many cases, banks had revoked the Government guarantee, impairing the image of the state. PSUs in Kerala owe more than Rs 500 crore to the banks.

In the past, attempts to revive PSUs had been lost in the labyrinth of public debates on graft. The Centre-state tie-ups had emerged hassle-free with a short gestation period. This pragmatic approach towards development would hopefully also serve the purpose of confidence-building among private investors.